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Comment by rayiner | Hacker News Reader

Why does Economics 101 go out the window when it comes to labor supply and demand? Rising prices increase supply until supply and demand reach equilibrium. The "sustainable salary expense" is whatever the market decides it is. Remember, prices affect the demand curve too. The specter of businesses not being able to afford labor is wholly fictional. If the market price of programmers is $300k and some businesses cannot afford nurses at $300k, that doesn't mean there is anything wrong. If the market price is $300k, that means there are companies who get much more than that in value out of each programmer, and so all that happens is that programmers get shifted from companies that generate less value to companies that generate more value.

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>Why does Economics 101 go out the window when it comes to labor supply and demand? Rising prices increase supply until supply and demand reach equilibrium.

why does Dynamic Systems 101 goes out of the window when it comes to proponents of supply/demand economics? Positive feedback in a system - like rising prices increase supply - is not necessarily leads the system to equilibrium, in many cases it is a recipe for the system to swing even more widely out of equilibrium. What do they teach these days in colleges?!

If higher wages drive higher labor supply, why haven't all the laid off factory workers gotten jobs as software developers or nurses[1]? Even the mean salaries in those industries are much higher than unemployment payments. And yet, there are labor shortages in both, and a large number of unemployed factory workers.

The answer is that it is very difficult for people to change industries. It would be like if you needed gold for a product you're manufacturing, but only iron was available. No matter how much you're willing to pay for it, iron won't do what gold does. Only mining, or transmutation, can give you what you need.

We're mining new developers and nurses by educating youth. The question is, can we transmute factory workers?

[1] Just using these industries as examples.

Who says there's a shortage of software developers? Outside the Valley and the Bay Area in general, who says mean and median software salaries are going up?

Not everyone has the aptitude to do certain jobs. I‘m never going to be a professional basketball player, and most people are never going to be professional software engineers. I think some of the best and brightest students who previously would have gone into fields like business, law, and medicine are now going into software engineering because of the hot job market. Additionally, some students who were considering graduate school end up going to work in industry right after they finish their undergraduate degrees because they’re effectively getting “bought out” by large signing bonuses and starting salaries.

Shortage doesn't mean the market doesn't clear. Of course the market will clear. Absent price controls it will always clear. But sometimes the price ends up higher than we think is good for everyone.

We think that things would be better for everyone if we could train more people to be effective programmers.

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